Question 11
“Some retirement plans allow older savers to contribute extra amounts beyond the regular contribution window as a ‘catch-up’ feature. The concept exists to help people who start saving later or who want to accelerate savings as they approach retirement. Not all plans or accounts allow catch-up contributions, and the exact amounts vary by plan and by regulation, but the arithmetic of how a catch-up adds to total contributions is straightforward: you add the catch-up amount to the regular contribution limit to get the total possible contribution for an eligible year. This practical calculation helps you see how much more you can put aside when catch-up provisions apply — useful when budgeting or planning a higher-savings year.”
Suppose a plan’s regular contribution limit is $20,000 and an eligible catch-up amount is $5,000. If you make both, what is your total contribution for the year?
Did You Also Know...
By Wise Wallet
Paper money experiments began in China and by the Song dynasty (around the 11th century) paper currency was widely used.